Topix Overhaul Takes Effect as Up to 700 Stocks Face Removal

Japan Exchange Group Inc.’s first large-scale reshuffle of the Topix Index went into effect Friday, in what Mint reports is the biggest overhaul in the benchmark’s history. The change may shrink the number of constituents by more than one-third, potentially cutting about 700 names and leaving the index with fewer than 1,000 members.

Key facts

• Stocks slated for removal will be phased out over eight quarters, with their weighting reduced to zero — though a company can stop the process by meeting Topix inclusion criteria at the next reassessment, per Mint.
• Index eligibility is being widened to market segments aimed at smaller and growth firms, provided they meet criteria including liquidity. Annual reshuffles begin from October 2028.
• The Topix has about ¥160 trillion ($1 trillion) of passive assets and ¥72 trillion in listed exchange-traded funds tracking it, according to a Jefferies note cited by Mint.
• Stocks to be added and those listed for removal in the initial reshuffle have posted median year-to-date returns of 28% and -2.5%, respectively, against a 17% gain for the Topix.
• In a separate report, Coinpedia reported that SK Hynix shares jumped around 8% in U.S. premarket trading on Wednesday after record third-quarter earnings.

What changes for listed companies

To stay in the index, companies must clear thresholds tied to measures including annual traded-value turnover — how actively shares change hands — and the market capitalisation of shares available to public investors. As larger companies gain market value through their outperformance, the bar rises for smaller firms to stay above the cutoff.

Also read: Brazilian stocks surge as Flávio Bolsonaro leads first round with 47%

Jefferies analysts including Shrikant Kale wrote that the changes should improve liquidity and investability in the Topix. Companies at risk of removal may respond with growth-oriented investment, higher shareholder returns or restructuring to support their stock prices, the note said. Firms tightly held by founders, families or strategic shareholders could raise free float through stake sales, while unwinding crossholdings could also help. Some listed units may come under more pressure to reconsider their listing if their weighting is cut and liquidity thins further.

The first phase and its lessons

This is the second phase of Topix reform since the Tokyo Stock Exchange reorganised its markets in 2022. The first phase, which ended in January 2025 under looser liquidity requirements, removed about 400 stocks. A report from SMBC Nikko Securities cited by Mint found that companies removed in that phase later showed signs of deteriorating corporate governance, including a lower proportion of outside directors and weaker valuations. Reduced monitoring by institutional investors after exclusion was one possible reason, according to the report.

Also read: US Stocks Close Mixed as Q3 Earnings Season Opens

The SMBC Nikko findings were reported by Mint; they were not independently verified in the other sources reviewed here.

Earnings and tax topics in the mix

Beyond the index story, Coinpedia reported that SK Hynix’s third-quarter revenue reached KRW 104.62 trillion, up 328% year over year, while operating profit hit KRW 83.33 trillion, a 632% annual rise, with an operating margin of roughly 80%. The chipmaker announced a shareholder-return plan of about KRW 100 trillion for 2026 and said it expects memory demand to exceed supply through 2030.

Coinpedia also published technical levels for SK Hynix shares, citing a prior close of $145.36 and a premarket quote near $155.46, with $150 and $155–$161 flagged as upside levels. Bitcoin Magazine, meanwhile, published an interview with Deloitte’s Rob Massey on crypto tax compliance, in which he explained which wallet moves are and are not realisation events and why broker 1099s never give the full picture. Massey, who has advised on crypto taxes at Deloitte since 2012, also noted that no de minimis exemption has passed.

Why it matters

The reshuffle matters to anyone holding Topix-tracking funds or Japanese small and mid caps, because index membership drives passive inflows and the visibility that comes with them. The first-phase experience suggests exclusion can weaken governance and valuation over time, which makes the October 2027 reassessment a live commercial question for hundreds of listed firms, not just a technicality.

What to watch

The next reassessment, in October 2027, is the point at which earmarked companies can halt their removal by meeting inclusion criteria. Annual reshuffles are scheduled to begin in October 2028.

This is not financial advice, and markets are volatile and uncertain. Readers should do their own research before making investment decisions.

Written by

StockPil Editorial

The StockPil Editorial desk covers stock markets, business, finance, forex and crypto. Our AI-assisted newsroom builds each article from published, linked sources, checks it for accuracy before it goes live, and our editors review published articles and correct anything that needs it.

Sources: Mint, Coinpedia, Bitcoin Magazine